Upfront: Tough at the top

Monster pay outs to departing executives are an exception not the rule, according to worldwide survey of nearly 1500 companies in 32 countries.

According to The Global Severance Practices Survey conducted by US-based Right Management Consultants, most companies limit exiting executives to four or fewer weeks of severance pay for each year of service. Only quarter or fewer employers offer perks such as financial planning, retirement planning, secretarial support or the use of office space.

According to Right’s research, 55 percent of the companies surveyed around the world put cap on severance payments, even at the top levels of the organisation. And among the most aggressive in limiting payments are United States companies where 57 percent said they placed cap on payments, and Canadian companies where 60 percent of them said the same. Half the organisations surveyed said they based their severance practices solely on years of service.

According to the researcher, media headlines have sensationalised pay outs by focusing on “a small minority of corporate executives” and creating the perception that corporate executives are overpaid, over privileged and drain on the company from which they depart. The daunting realities for many existing and departing corporate executives include:
* Fewer opportunities available compared with other levels of management;
* Top level opportunities are harder to find and may require relocation;
* Top executives focus much of their time on delivering business results – leaving little time for developing and maintaining personal networks.

The consultants believe top executives need more time and support than other levels of management. Enhanced severance benefits should not be seen as perks for the privileged, but necessary tools for the hard to place. Corporations need leadership development strategies that ensure the lasting success of the business and their most visible employees.

Their advice:
* Don’t overreact to headlines; develop severance and termination practices that support the mission, vision and corporate culture;
* Understand the needs of top executives and provide specific termination benefits (coaching, financial planning, retirement planning, etc) beyond normal years of service calculations;
* Understand the long-term benefits from treating your most visible employees in way that is consistent with overall people strategy and employment brand.

They suggest employers recognise that brand building happens in bad times and in good. Therefore, “use your termination and severance practices to differentiate your enterprise as place where top talent wants to work”.

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